The main investment risks of bond funds include interest rate risk, credit risk, early redemption risk and inflation risk.

(1) Interest rate risk: The price of bonds is closely related to changes in market interest rates, and moves in the opposite direction.

Therefore, bond funds with bonds as their main investment objects will also be affected by market interest rates and move in the opposite direction. At the same time, the longer the average maturity date of bond funds, the higher the interest rate risk of bond funds.

(2) Credit risk: refers to the risk that the bond issuer is unable to pay interest on time and return the principal when due.

Some bond rating agencies rate the creditworthiness of bonds.

If the credit rating of a bond declines, the price of the bond will fall, and the net value of the fund holding the bond will also fall.

(3) Early redemption risk: refers to the risk that the bond issuer may repurchase the bond before the bond maturity date.

When market interest rates fall, bond issuers are able to raise funds at lower rates and therefore repay high-interest bonds early.

Funds holding bonds with early redemption rights will not only be unable to obtain high interest income, but will also face reinvestment risks.

(4) Inflation risk: Inflation will eat up the purchasing power formed by fixed income, so investors in bond funds cannot ignore this risk.